California State Treasurer and gubernatorial candidate John Chiang told business leaders at Fantasy Springs Resort Casino on Tuesday that he’s working on a proposal that could establish a state bank so that the new marijuana industry, while legal, can operate safely.

Voters legalized recreational marijuana last year, but the permitting system remains in contradiction with federal law that continues to classify marijuana as a drug on par with heroin.

“At this point in time, there is no perfect solution,” Chiang, a Democrat, said at a Greater Coachella Valley Chamber of Commerce breakfast. “Unless the federal government creates some legislation that provides clarity with how you handle cannabis, there will always be legal and financial risk.”

For banks, that means accepting deposits from marijuana companies. For business owners, that means carrying large supplies of cash.

Some city governments and entrepreneurs in the Coachella Valley are eager to take part in a new industry that’s expected to stir $7 billion worth of economic activity statewide and provide $1 billion in tax revenue.

Chiang’s working group, which includes bankers and regulators, is expected to release a report with more detailed recommendations in a few months.

Over the course of an hour, Chiang spoke of his upbringing as a child of immigrants and answered questions on a wide range of topics. He’s supportive of the state’s efforts to become a sanctuary state, saying, “I want to make sure honest and good Californians are protected.” He is also generally supported of the state’s climate initiatives and vowed to push for “green bonds” that would make up for a lack of federal funding.

Unlike Antonio Villaraigosa, the former mayor of Los Angeles who's also running as a Democrat for governor and spoke with business leaders in May, Chiang said he's not supportive of a plan to pump billions of gallons of water out of the Mojave Desert every year and sell it to Southern California agencies. Chiang cited environmental concerns.

As the state’s top banker, Chiang offered financial solutions to many of the state's problems. To spur more affordable housing, he proposed bringing back redevelopment agencies with modifications to prevent the abuses of the past. He also spoke of the need for “social impact grants” that could provide housing for the homeless who are most in need.

Editor's note: the headline was updated to reflect that Chiang has not endorsed a public bank for marijuana businesses but is exploring options.

This article is part of the Insider column, a weekly roundup of political and public policy news. The full column runs every Sunday in The Desert Sun. Reach the author at jesse.marx@desertsun.com and @marxjesse on Twitter.